About FunFair

FunFair is a decentralised gaming platform powered by Ethereum smart contracts. Thanks to our breakthrough technology, it is the first platform to solve the big challenges that have made other blockchain casinos unplayable. Our vision is a limitless universe of transparent, secure casinos that can be easily created by anyone, anywhere, where games are fun, fast and fair. That’s why we’re called FunFair.

FunFair - Fast & FairGames

Using decentralised, open-source technology and Ethereum smart contracts, we can eliminate any doubts about game fairness. But transparency isn’t enough. Users should never have to wait for their next game, nor should anyone have to shoulder the burden of blockchain transaction fees for each spin of the slot, or hand of blackjack. Our ground-breaking approach to Random Number Generation and ‘Fate Channels’ delivers the seamless experience that 21st century gamers demand.

FunFair - PureEntertainment

Players are at the centre of everything we do, which means fairness, speed and better payouts are just the start. Our combined 40 years of experience building gaming and casino software means we will never compromise on user experience. Our great looking, intuitive games come preloaded with the platform, showing future FunFair developers what’s possible. And so you know we mean business when it comes to delivering a product, you’ll be able to test some of our games yourself before the token creation event begins.

FunFair InstantRewards

Funfair’s token, FUN, is the currency of this new ecosystem. It is the fundamental method of interaction with FunFair smart contracts, ensuring every participant is rewarded for their contribution. Users will buy FUN tokens as the chips in FunFair’s online casinos. Game developers will get paid in FUN. Casino licensees will finance their operation solely with FUN, and affiliates who bring in new players will be paid in FUN. Platform service fees such as Random Number Generation will be paid in FUN, and then burnt. Participate in our upcoming token creation event and you’ll join us on the FunFair ride of your life, as we revolutionise the world of online gaming.

FunFair Roadmap

FunFair Token in Brief

Our token FUN will be used for all platform actions, including betting, lending, paying out players and compensating stakeholders. FUN will only be created during a single event commencing June 22, 2017 at 14:00 UTC. FUN should become more valuable and useful over time as additional FunFair developers and operators launch casinos and new games

Start Date: June 22, 2017 (UTC 2017-06-22T14:00:00Z)

End Date: July 7, 2017 (UTC 2017-07-07T14:00:00Z)

Cap: 5 Billion Soft, 12.5 Billion Hard.

Price: 100 FUN/USD

Founder Stake: 37.5%

Advisor Stake: 2.5%

Bonus Period: Up to 150 FUN/USD

FunFair Games Details:

Figure 1: 3D Roulette - one of the Many Games Built on the FunFair Platform

Combined, FunFair’s founders have a proven track record of over 40 years’ creating innovative interactiveentertainment products and have sold millions of games in the process. We know what it takes tomake a good casino game great and now we’ve built the world’s first blockchain-based platform that iscapable of meeting the demands of a high-quality online gaming experience.Our core team comprises more than ten full-time developers and we have already completed the firstblockchain-based 3D games using the FunFair platform in HTML5. These initial games stand as afully-playable proof of concept, demonstrating the advanced capabilities of FunFair’s platform andserving as inspiration in order to kickstart the ecosystem ofoperators and developers around the world.Games built on the FunFair platform run directly in the browser on desktop and mobile devices withoutrequiring an app download, completely eliminating one of the major pain-points of player onboarding.Here are sample images of some games under construction (we have six in our launch suite). You canview more images and videos of these games in action on the website. They will be offered as playableprototypes prior to the token event to demonstrate the technologies and capabilities of the platform,including the first generation Fate Channel technology will be playable in at least one of the games

Operators: Launch A Casino in 2 Clicks

We’re not planning on launching just one online gaming casino — we have built a platform to effortlesslylaunch thousands of online casinos, hosted by operators and organizations of all sizes, anywhere in theworld.Operators and developers who license the FunFair platform have the ability to create fully-customizedplayer experiences for traditional games of chance such as slots, blackjack, roulette and baccarat. Wewant to enable anyone who wishes to build, publish, host and play them — and for all parties to befully assured that every game is fair and trustworthy.Unlike any existing online gaming platforms or services, a FunFair license allows an operator to easilyset up and host their own casino under a private label. Individuals or organizations will be able toselect games from a marketplace and offer standard or VIP rooms with customized in-house bonusesfor their players.When the operator is ready, the platform enables them to publish a full casino suite and go live in justtwo clicks.

1.Developer Friendly

FunFair’s platform is designed by game developers, with game developers in mind. The games alreadybuilt demonstrate the superiority of the FunFair platform. No other platform has to date been able tooffer instant, cost-effective real-money gaming to players and developers.

2. ENS-Ready

FunFair investors have already acquired several gaming-related .eth domains, including blackjack.eth,for FunFair operators’ and affiliates’ exclusive use. Full details on how to access these domains will bepublished in Q3 2017.

Instant, Frictionless Gaming

To date, developers have not been able to create blockchain-based games that are worth playing.Nobody wants to sit for a minute (or longer) while the dice roll waits for multiple blocks to be minedbefore it can report the result back to the player. Yet this is the state of blockchain gaming today. Noneof our competitors have addressed this shortcoming — not because they don’t recognize the issue, butbecause it’s a very complex problem that nobody has solved — until now. FunFair’s patent-pendingtechnology does the hard work of making truly instant blockchain games available to everyone. This iswhat will win the market.

1.Signup and KYC

Self-sovereign identity technology from industry leaders including Consensys Civic and New Alchemyis coming to market later this year. Where possible we are planning to support these technologies toallow safe, private single-click sign-ups that take less than a second. We believe that every second ofcustomer time saved during sign-up will double participation1.

2.Putting Social First

The FunFair platform has been designed from the ground up to encourage viral uptake. All casinogames are designed for easy invites and sharing so that users can create virtual groups and play withtheir friends. Additionally, post- launch, functionality will be integrated which allows operators togrant affiliate revenue sharing to social players.

3.HTML Only

We’ve created a browser-based online gaming platform that utilizes the HTML5 and WebGL standardson both mobile devices and desktop computers to provide the rich 3D graphics to deliver a highlypolished fast and responsive user experience that players of app-based games are used to.

10x Cheaper Betting

The sluggishness of legacy blockchain-based games isn’t their only limitation: Even if players werepatient enough to play fewer than 30 bets per hour, they wouldn’t be prepared to pay the price. Notonly can high transaction costs wipe out winnings for players, they can also severely impact earningsfor operators.

1.Current Competition is Unsustainable

We have been actively tracking gas costs across multiple Ethereum blockchain-based casinos presentlyoperating. Transaction costs to play a single hand of blackjack can exceed $1.00 and dice games canexceed $.75 per bet on average.A typical preferred individual bet stake is in the $1-$10 range — this is how the majority of real-moneybets are staked globally. At these sizes, transactions fees can overwhelm the size of the bet.Even when a player wishes to make larger bets in the $20 range, the transaction costs can stilloverwhelm the house edge — in total an average 12% cost between house edge and fees. For thisreason, only players willing to stake amounts greater than $50 generally play these games. Loweringgas costs is only a temporary solution because as ETH prices rise, fee costs will make bets such as thisuneconomical once more.As part of our market research we contacted Encore Las Vegas, a high-end casino operator, to determinewhat percentage of their machines are used for high dollar bets. Encore’s representatives estimatedthat there were “definitely five” $50+ slots out of 1,000 machines in the entire casino (as of June 6,2017.) It is apparent to us that high-stake bets in excess of $50 will not become commonplace intypical use-case situations.

2.Fate Channels: A Long-Term Solution

Online games should be cost-effective, affording repeat gameplay without adding unsustainabletransaction costs. Because ETH prices may continue to rise, pushing up gas costs in the process,we needed to devise a solution that provides bets at less than 1/100th of the current industry cost.Typical competitor costs today can exceed 10% per bet for players — our goal is 0.1%.We believe that we have created a long-term solution for transaction cost problems with a uniquepatent-pending implementation of State Channel technology, developed specifically for online gaming.We call this technology Fate Channels.A Fate Channel is a State Channel opened for the duration of a gaming session, supporting customgaming messages between the FunFair client and server. The only transactions on the blockchain occurat the beginning and end of the gaming session. Because a gaming session is instant and can includehundreds of bets, our costs are an order of magnitude lower than our competitors.A complete description of Fate Channels, our Random Number Generation Scheme and the TechnologyRoadmap can be downloaded in the White Paper section at funfair.io.

Serverless Operations

FunFair has been engineered to be as attractive to online gaming operators as it is to players, eliminatingserver racks and stifling overhead costs of the traditional online gaming systems (that can run intomillions of dollars to deploy). Our existing technology allows licensees much lower overhead costs forrunning a casino.By the time FunFair launches its v4 Fate Channel implementation the system will be entirely serverless.A completely serverless, employeeless peer-to-peer casino is vastly more resilient and significantlycheaper to operate than one which must deal with banking institutions, data center hosting costs and payroll management. We firmly believe our technology will be transformative for the online gaming industry.

Funfair token (FUN) presale raises $26 million in 4 hour

Tech entrepreneur Jez San’s latest venture, FunFair Technologies,
has raised a landmark sum from the presale of tokens that will
eventually power every aspect of its blockchain-based gaming technology
platform. FunFair is designed to deliver unrivalled transparency for
consumers and efficiency for casino operators.

Slated to last a maximum of 15 days, FunFair’s Phase 1 Token Presale
on June 22 sold out in just 4 hours, having reached its hard cap of $10M
in contributions made using the Ether cryptocurrency. FunFair also
received more than $15M in Bitcoin and other cryptocurrencies from
individual contributors as well as institutional funds, including
Kryptonite1, Block Tower Capital, and Pantera Capital.

“I’m thrilled that the blockchain community and institutional
investors have so emphatically backed the team, our vision and the
progress we’ve already made,” said Jez San OBE, founder and CEO. “Now
it gets even more exciting as we work towards a live platform and the
creation of a truly fair, transparent and player-focused gaming world.”

“FunFair is an incredibly clever Ethereum-based casino games
company – decentralized, P2P, provably fair online gaming. My intuition
is that Funfair is going to be huge,” noted Dan Morehead, Founder and CEO of Pantera Capital.

“Funfair will be one of the first practical applications to go
live on Ethereum, and it actually solves a real problem of high casino
fees and trust. It’s an Ethereum app that I could actually see my
grandma using, which is pretty cool!” remarked Joey Krug, Co-Chief Investment Officer of Pantera Capital.

“FunFair has built the first production-ready state channels,
powering incredibly quick games without compromising on provable
security. They’re leagues ahead of other efforts. Jez is everything you
could want in a project lead, and I believe FunFair will be an
invaluable addition to the ecosystem,” said Charles Noyes, Analyst, Pantera Capital.

“Funfair, the team and the technology, were very impressive.
Gaming is a major vertical set for disruption by smart contract
technology and Funfair are by far the furthest ahead in terms of
functionality and playability.” George McDonough, CEO of Kryptonite1.

“I’m excited to see an experienced entrepreneur like Jez San
bring Blockchain technology to gambling. Gambling is an obvious use case
for Blockchain tech, but hasn’t yet been implemented in a user-friendly
way – I’m looking forward to seeing FunFair change that,” noted Ari Paul, Founder, Block Tower Capital.

“Jez and the FunFair team are fantastic. I’ve known Jez since
2013, and it’s been a privilege to work with his team defining the token
mechanics and creating the ultra-efficient, token sale contract. I’m
looking forward to the next phase for FunFair!” said Peter Vessenes, Managing Director of New Alchemy.

FunFair (FUN) A model for future token sales

Founders Jez San, Jeremy Longley and Oliver Hopton have a proven track record of over 40 years creating innovative interactive entertainment products and have sold millions of games in the process. The team went public with their plans in early June, publishing commercial and technical white papers, news of its Token Presale and an early platform prototype with casino games playable on an Ethereum test network, using FunFair’s unique Fate Channels.

FunFair’s Token Presale took place against the backdrop of recent
Initial Coin Offerings (ICOs), which have placed enormous strain on the
blockchain, causing global disruption and shutting out potential
investors. FunFair delivered an orderly sale with no blockchain
disruption and no fraudulent interference thanks to a number of ICO
innovations:

FunFair was the first to use the Ethereum Name System (ENS) in a
Token Sale, directing people to ‘funfund.eth’, in addition to providing a
hexadecimal Ethereum address. This resulted in a more secure investment
channel, reducing opportunity for fraudulent activity.

New Alchemy, the advisers and managers of the FunFair Token Presale
were responsible for the gas efficient, Multi-Mint Technology that
enabled FunFair to accept not only Ether, but also Bitcoin, ZCash, and
selected ERC20 tokens.

FunFair is implementing a two-phase token event strategy, including a
limited Phase 1 Presale enabling early adopters and investors to
participate, followed by a larger Phase 2 event due later in the year.

Combination of VIP and community outreach maximized both volume of
participants and total USD raised, with over 1,500 transactions to the
smart contract, evidence of the broad participation base sought by the
team.

Soft cap and further 4-hour sale period enabled all investors to participate within the short time window.

The FUN token has already been listed on one cryptocurrency exchange
including Bittrex and EtherDelta, helping to raise awareness of the
project and determine a fair market value ahead of the Phase 2 Token
Event in September.

According to FunFair’s roadmap,
its development team will now focus on more advanced iterations of its
proprietary Fate Channel technology, a larger suite of games including
Roulette and Blackjack, and an Alpha release of the platform before the
year’s end.

In addition to beautiful hi-res graphics, the new FunFair Roulette
game has the lowest fees (gas costs) paid per transaction. Players only
pay at the beginning and end of each session – not each roll of the dice
like most other games. As a result, players can receive the biggest
profits without delays or withdrawal fees – even during long sessions
that most players prefer.

Players will need “test Ether” to play the new Roulette game. In due
course we will issue free, test versions of our FUN tokens to play our
games. FUN tokens power every aspect of the FunFair gaming platform.

We’d love to hear your feedback; please join the FunFair Community
group on Discord #showcase-feedback if you haven’t already. You can
register at discord.gg/rwETqSP.

FunFair (FUN) Mirror, mirror on the wall

The FUN token is the underlying currency of Funfair’s gaming economy.

Approximately 17 billion FUN tokens have been created. The supply is
finite by design – no more will ever be created – and will reduce over
time as tokens are burned through a number of network processes. The FUN
token enables Funfair to develop and market to gaming operators so they
can offer a variety of distributed gaming models to their audiences.

Funfair’s decentralised casino games bring gaming into the 21st
Century by disrupting traditional land based and online casinos in a
number of ways, and these bring value to the underlying economy.

This blog post addresses the value added to tokens as the ecosystem develops over time.

Who is the fairest of them all?

Funfair offers unrivaled fairness. No rogue operators, no rigged
games, no risk of interference. Total control over game security, data
security and payments. For the first time, end users – the casino player
– can be certain, instead of having faith, that they’re getting a fair
deal.

By using Ethereum Smart Contracts and our own internally developed
Fate Channels to execute each game, and the Ethereum blockchain to
publicly record each result, our platform delivers provable fairness and
full transparency without any loss of efficiency or time. More on the
science behind this in a future blog post.

Our provable fairness extends beyond the existing initial
deterministic random number generation to ensure neither the house nor
players can tamper with our games. Funfair has designed every aspect of
the game provably fair at a granular level – with play by play trustless
verification.

There can be no means of dishonest play from either the operator or player.

Fair play, fair competition makes better business

The traditional online gaming world is currently dominated by a handful of major operators.

Strict regulation, compliance and licensing mean that even with a
loyal audience, smaller operators struggle to compete. Often prohibitive
operating costs squeeze margins and reduce competition. Trusting small
or new operators is an issue for players and affiliates alike.

With Funfair, becoming an operator is quicker and easier than ever
before. Players won’t need to make a judgement about the trustworthiness
of an operator. They can simply play with absolute certainty of the
integrity of each game, and of the automated, decentralised payments
system that the FUN tokens enables.

If it can be bet, it can be won

Funfair’s platform makes it impossible for operators or developers to
alter the game payout mechanics, and for players to defraud the house.
The operator can therefore focus many of the resources previously
dedicated to payments, support and infrastructure to marketing, growth
and regional compliance. Along with obvious benefits to the house and
the player, these new levels of transparency can also offer regulators
ideal solutions in their quest for operator integrity and player
protection.

Unlike traditional online casinos and first-generation cryptocurrency
casinos, players will fund games directly from their FUN token wallet.
This greater degree of control over their funds delivers both enhanced
levels of protection from inefficient, rogue or bankrupt operators, plus
an improved user experience with none of the traditional delays in
cashout processing times. For operators, this eradicates the onus on
transaction processing, and removes the cost of fraudulent activity and
chargebacks.

Removing the need to send funds to an operator wallet and instead
playing direct from your own further protects players by reducing the
risks of error in sending funds, those funds being intercepted or
operator wallets being compromised.

The Funfair platform locks into smart contracts only those funds
wagered on that hand or spin, and they can only be released to either
the player or the operator once the game outcome has been determined.

While the player commits their wager to the contract, the operator
must also provide the maximum sum that the player can win, to ensure
automatic payment whatever the outcome (e.g. in casino games such as
slots where a range of payout odds is possible). This ensures the
operator is actually able to commit the funds that can be won. And
should the player win, they are immediately paid their winnings along
with their original wager.

This is in stark contrast to the issues that can arise when
significant sums are won in traditional online casinos who offer huge
progressive jackpots. Some operators are not in a position to – or seek
to avoid or delay – paying out, using terms & conditions to pay in
smaller installments after significant gameplay and background
verification.

Many of the largest promised jackpot games – Megabucks, Wheel of
Fortune, Jeopardy, The Price is Right – pay out jackpots as an annuity
over 25 years, with no recourse should a player ask for the full sum.

With Funfair’s games, the smart contract removes much of the
administration, cost and friction on both sides of the wager, simply
releasing funds to the appropriate party once the games has ended.

Our new games

As with our other Fate Channels-powered games, Baccarat
is now played with test Ether, each hand uses Ethereum smart contracts
to run the game logic and the results of each session are recorded on a
test Ethereum blockchain. You’ll need to use an Ethereum-compatible
browser or plugin such as Metamask to connect.

Craps is a new addition to our showcase, and once you’ve figured out
(or given up trying to understand) the rules, it runs locally in your
browser. The full-fat Fate Channels version is on its way!

FunFair (FUN) Randomness is a big deal

This blog is a repost of a comment made by FunFair founder Jez San in this Reddit threadon 8 August 2017.

Randomness is actually a very big deal and is what makes FunFair’s games so Fun (.. and Fair 😉 )

Contrary to some beliefs, randomness most certainly is possible in
Ethereum. The trick is how expensive and how fast it is. FunFair has
advanced the field with its own unique State Channel implementation
that’s optimised for gaming (and isn’t the same as what Raiden is
working on, btw).

We call them Fate Channels because they help us generate realtime
random numbers that are fast and provably fair, but also each RNG
provably comes from the same sequence, in order, so we can prove the
house wasn’t selective in which random numbers it used on which game
(another way the house could cheat in conventional gaming systems).
Games need lots of random numbers. Every spin of the roulette wheel,
every roll of the dice, every deck of cards needs lots of random
numbers, and for the player to have a good experience, these need to be
fast enough that the player isn’t made to wait an agonisingly long
amount of time. The faster, the more zippy the experience and ideally,
to play as fast as the player wants to play.

In our Fate Channel implementation, the player and the house each
contribute a part of the seed of the randomness, and the thing that
makes it provably fair is that it’s committed in advance to the
blockchain. It is a commit/reveal scheme, so the seed that’s committed
in advance is shielded from view by anyone (the miner, the player etc)
until after the games are played, and then the secret seed is revealed
to prove that all games played in the prior session were fair, and the
entire sequence of random numbers came from the same seed, in provable
order. This method can’t be cheated by anyone – not the house, the
miner, the player etc. We’re doing further research work to extend this
technology to support fully peer to peer gaming.

This fast randomness, coupled with Smart Contracts, allow the entire
player’s game experience to be provably fair. The Fate Channels are a
very efficient way to implement realtime games, especially when the
player sits down to play multiple games (very common).

They have some desirable benefits too, like near zero gas costs for
playing an entire game session. The player pays a small amount of gas
(less than one bet on most Ethereum games) to open the Fate Channel as
they sit down to play a game. And all the games inside that session –
even hundreds of games played in an hour – are zero gas cost. ‘The
house’ pays the closing channel gas cost so the overhead to the player
is insignificant, especially compared to other solutions. Often Ethereum
gaming sites’ games have high and seriously uneconomic overheads to
play (and usually slow wait times).

To compare the benefits of this tech versus alternatives, we can
split the market into three categories of gaming. Traditional credit
card based online gaming, Bitcoin gaming and Ethereum gaming. We think
the superior fairness of Ethereum games in general will eventually win
out, as the player isn’t required to make a deposit that is held by the
casino for a long period of time (unlike Bitcoin or credit card gaming).

Also, the fact that the entire game logic and outcomes are
transparent and provable is what makes Ethereum gaming the best player
protection and fairness available in the marketplace. But usually this
fairness comes with two costs.

Most Ethereum games are slow to play (sometimes minutes per hand)
because they usually wait for several blocks to be mined and receive
their outsourced random number – and also they cost a lot of gas because
they do unnecessary on-chain transactions that spam the blockchain with
intermediate results. Some use blockchain randomness like the
block-hash for their random number generation, which can be cheated by
miners.

FunFair is not only fair, but fun 😉 We achieve ‘fun’ by creating
highly interactive and graphical games to a high standard.. but also
because the reaction speed of the games is fast enough that the player
experience is fun. FunFair might even be the ‘snow white’ of gaming…
(the fairest of them all).

Jez San

Want to know more? Join our DiscordTelegram groups and come along for the ride!

The FunFair Economy (Part 1)

The FUN token is the underlying currency of FunFair’s gaming economy.

The supply is finite by design. A set number were created once during
the Phase 1 Token Presale, and no more will ever be created. The total
number in existence will also reduce over time as tokens are burned
through a number of network processes. The FUN token powers every aspect
of the FunFair ecosystem, and enables gaming operators to offer a
variety of distributed gaming models to their audiences.

FunFair’s decentralised casino games bring gaming into the 21st
Century by disrupting traditional land based and online casinos in a
number of ways, and these bring value to the underlying economy.

This blog post addresses the value added to tokens as the ecosystem develops over time.

Who is the fairest of them all?

FunFair offers unrivaled fairness. No rogue operators, no rigged
games, no risk of interference. Total control over game security, data
security and payments. For the first time, end users – the casino player
– can be certain, instead of having faith, that they’re getting a fair
deal.

By using Ethereum Smart Contracts and our own internally developed
Fate Channels to execute each game, and the Ethereum blockchain to
publicly record each result, our platform delivers provable fairness and
full transparency without any loss of efficiency or time. More on the
science behind this in a future blog post.

Our provable fairness extends beyond the existing initial
deterministic random number generation to ensure neither the house nor
players can tamper with our games. FunFair has designed every aspect of
the game provably fair at a granular level – with play by play trustless
verification.

There can be no means of dishonest play from either the operator or player.

Fair play, fair competition makes better business

The traditional online gaming world is currently dominated by a handful of major operators.

Strict regulation, compliance and licensing mean that even with a
loyal audience, smaller operators struggle to compete. Often prohibitive
operating costs squeeze margins and reduce competition. Trusting small
or new operators is an issue for players and affiliates alike.

With FunFair, becoming an operator is quicker and easier than ever
before. Players won’t need to make a judgement about the trustworthiness
of an operator. They can simply play with absolute certainty of the
integrity of each game, and of the automated, decentralised payments
system that the FUN tokens enables.

If it can be bet, it can be won

FunFair’s platform makes it impossible for operators or developers to
alter the game payout mechanics, and for players to defraud the house.
The operator can therefore focus many of the resources previously
dedicated to payments, support and infrastructure to marketing, growth
and regional compliance. Along with obvious benefits to the house and
the player, these new levels of transparency can also offer regulators
ideal solutions in their quest for operator integrity and player
protection.

Unlike traditional online casinos and first-generation cryptocurrency
casinos, players will fund games directly from their FUN token wallet.
This greater degree of control over their funds delivers both enhanced
levels of protection from inefficient, rogue or bankrupt operators, plus
an improved user experience with none of the traditional delays in
cashout processing times. For operators, this eradicates the onus on
transaction processing, and removes the cost of fraudulent activity and
chargebacks.

Removing the need to send funds to an operator wallet and instead
playing direct from your own further protects players by reducing the
risks of error in sending funds, those funds being intercepted or
operator wallets being compromised.

FunFair’s Fate Channels lock into the smart contract funds wagered by
the player and put up by the operator for the duration of the session,
and those funds can only be released to either the player or the
operator once the game outcome has been determined, and the Fate Channel
has been closed.

While the player commits their wager to the contract, the operator
must also provide the maximum sum that the player can win, to ensure
automatic payment whatever the outcome (e.g. in casino games such as
slots where a range of payout odds is possible). This ensures the
operator is actually able to commit the funds that can be won. And
should the player win, they are immediately paid their winnings along
with their original wager.

This is in stark contrast to the issues that can arise when
significant sums are won in traditional online casinos who offer huge
progressive jackpots. Some operators are not in a position to – or seek
to avoid or delay – paying out, using terms & conditions to pay in
smaller installments after significant gameplay and background
verification.

Many of the largest promised jackpot games – Megabucks, Wheel of
Fortune, Jeopardy, The Price is Right – pay out jackpots as an annuity
over 25 years, with no recourse should a player ask for the full sum.

With FunFair’s games, the smart contract removes much of the
administration, cost and friction on both sides of the wager, simply
releasing funds to the appropriate party once the games has ended.

With FunFair then, if the player can bet, they can win.

Alex Lawn

Part 2 of this article, which focuses on the benefits of the
features outlined above, will be published soon. To discuss this article
with its author, join the FunFair Discord group.

We’re rapidly expanding in all areas, especially games development
and tech, and soon we’ll be expanding the marketing, business
development and admin roles in the company. If you’re interested in
joining the FunFair team, keep an eye on the Careers page or drop us an
email at [email protected] and tell us how you can help!

Our London office was already a tight squeeze in the beginning, so we
have now moved to larger offices in Camden Market, surrounded by other
cutting edge startups and successful digital organisations. That
collective sense of being in the vanguard of tech progress will be a
useful boost for the team during the long days ahead. Coincidentally the
building is owned by Teddy Sagi’s new company Market Tech. Teddy was
previously the founder of PlayTech, one of several companies we’re
modelling FunFair on. We like to think FunFair could be the disruptive
crypto version.

Treasury update

As you probably heard back in June, the Phase 1 FUN Token Presale
raised $26m in crypto at the time. Much of it came from institutions in
the days preceding the launch. The bulk of the funds raised were in
Ether (ETH), which promptly dropped in value almost immediately after
our token event, before we had the chance to sell any into fiat ($ or
€). Almost every cryptocurrency except Bitcoin (BTC) dropped during this
mini-crash.

As a result, a few weeks after the 22 June token event – when ETH had
been at $325, BTC at $2565 and BAT at $0.017 (of which we received
$2.4m, and whose price then halved) – our initial $26m ‘token sale’
holdings dropped in value to as low as $15m.

Although some investors believed we should have immediately sold all
of the crypto into fiat to de-risk our position entirely, we didn’t get
the chance. Also, it wouldn’t have been good value and we’d have taken a
substantial loss had we done that at June/July prices.

We decided on a treasury policy that would slowly sell down the
crypto into fiat and take advantage of de-risking opportunities whenever
they arose. We were fairly confident that ETH would return to its
previous heights in due course so we focused on selling the other
cryptocurrencies that were at or close to their price at the time of our
token sale event, or close to an all-time high (ATH).

BTC had just hit an ATH of nearly $3000 and was hovering around the
token event price, allowing us to sell a portion. After the hard fork
BTC went on a rally and recently passed $4500 offering us the chance to
sell more BTC on the way up, effectively raising a little more fiat than
we expected given our BTC holdings at the time of the token sale.

BAT had also dropped significantly in price after the token event but
eventually returned to and rose above the initial price. We felt that
holding a large amount of BAT was a risk we weren’t comfortable taking,
so we intended to liquidate our entire BAT holdings as soon as
practicable. That is now achieved – we managed to liquidate all of our
BAT holdings at an advantageous rate when the price spiked, and we’re
now holding that same value in BTC which we see as a lower risk.

We also liquidated the other alt coins we were holding, which weren’t
of significant value but it streamlines and simplifies our holdings
into just BTC, ETH, and Cash. After the BTC fork we also sold our
Bitcoin Cash (BCH), a little of which we had on an exchange and sold at
$500, though most of it was sold between $200-300. We sold the
remaining BCH at around $600 in the last few days.

In general we think we’ve optimised the sale of our crypto holdings
and sold at close to and in some cases above the prices set at the time
of our token event. We have yet to sell any of our ETH holdings as we
think it will rise further over the coming months, with some major
milestones being the Metropolis release, Devcon3 and other exciting
infrastructure developments like Raiden and Plasma. Also, some big token
sales (Bancor, Status, Tezos, EOS) are out of the way and there appears
to be a bit of calm as smaller token sales have become the norm this
last month or so.

Almost all of our costs are in fiat – salaries, rent, hardware, legal
and professional advisers etc – so it’s important for us to maintain a
healthy fiat cash balance.

Snapshot

As of today (31 August 2017), we’re holding around $6m USD in cash
(mostly in Euros) which will keep the lights on for many months. At our
current size it would last more than two years but we’re rapidly
expanding our team so the monthly burn goes up. At all times we intend
to hold at least six months’ runway in fiat and will continue to sell
our crypto assets as needed, or whenever there are good opportunities to
sell well.

Thus total holdings – today – are approximately:

Cash: $6m

BTC: 1500 ($7m)

ETH: 50,000 ETH ($19m)

Total: $32m

That gives us a de-risked cash flow in the business plus a healthy
value in unspent crypto above and beyond the value raised at ICO. We
also note that that to date the company has yet to spend a penny of cash
and the entire running costs of the business to date have been borrowed
from shareholders that are about to be repaid (circa $1m). This was
because it took the company a long time to get a bank account opened
(KYC these days is quite onerous for new companies).

Company Structure

We have a top co in Singapore called FunFair Private Limited that
created and issued the FUN tokens and sold them in the initial token
presale. Singapore is a blockchain-friendly but not gaming-friendly
jurisdiction so our Singapore HQ remains solely a holding company and
investment vehicle and not a trading company. FunFair Private Limited
owns foreign companies that invest in and execute IP licensing of the
games and technologies. FunFair has several middle co’s that hold IP,
contract work out and do licensing. These are in Malta, Gibraltar and
Guernsey, all gaming friendly jurisdictions. We have a bottom co in the
UK that does actual development work under contract for the middle co’s
and does not do licensing or any other function. We may have other dev
co’s in the future.

We believe this corporate structure serves our needs, is flexible and
adheres to local laws and regulations. We continue to fine-tune to get
best results and stay the right side of regulations, despite being
bleeding-edge on the legal front of both blockchain and gaming, so we
have to maintain continued legal advice in those areas especially well.

Tech update

Work on adding test-FUN tokens to the existing games has started and
will be part of a soon-to-be-released update that will allow the use of
FUN tokens to better test the systems. As always, we don’t run on the
main net because we aren’t a casino operator and wish to remain legal –
both from a gaming as well as blockchain point of view. The next few
major updates will include elements of provably fair gaming (dispute
resolution, proof of individual games etc) and peer to peer gaming
(incentives, bonds, slashing etc). Metropolis will be good for token
based economies like FunFair’s, allowing the contract – not the games
player – to pay for the gas (coming in Constantinople).

In the coming weeks, our CTO Jeremy will be writing a technical blog with a more detailed update.

Games update

At present there are eight games on the showcase that are running
today. They are all experimental prototype games that will continue to
be enhanced before release. They’re already pretty competitive with
what’s out there, but they will get immeasurably better before release.

Four are slots – with Alien, Pirates, Classic and Fairy Tale themes –
which show not only different graphics and audio sets but also
different gameplay and bonus games.

We have four table games; Baccarat, Roulette, Blackjack and Craps.
With the first eight games built, these represent something like 80% of
the revenue that a typical online casino would generate in revenue
terms, with Slots being the dominant game in the west and Baccarat being
dominant in the east.

We’ve almost completed our prototype Video Poker game (which is
looking deliciously retro!) and we know this category of game has a
dedicated following so we cant wait to hear what they think! We will
also try our hand at an ole’ fashioned blockchain ‘dice’ game. Some
(yes, including me) have joked that all we have to do is strip out all
the graphics, gameplay, audio and Fun from any of our other games, and
introduce some slow delays and wait for a few blocks to be mined for
every roll, and voila! – we have a blockchain dice game that’s
competitive with the others. But that’s a little cruel 😉 !

So we will actually try and create the best damn dice game we can
muster. We’re going to try and interpret the brief a little differently
than the rest and add some of FunFair’s special sauce and see what
happens. We don’t believe a dice game has to be underwhelmingly
text-based and slow to be successful 😉 I can’t wait to see what our
devs come up with.

Our strategy for the games is to be able to launch the FunFair gaming
platform with a suite of games that are highly competitive with
anything that’s out there in the big wide world of online gaming and to
largely ignore what’s going on from the current crop of existing
blockchain games, which are not particularly competitive and offer
little value other than the fact they take cryptocurrency as an input,
which is hardly rocket science.

In terms of production and entertainment value, many existing
blockchain games are lacking and we intend to change all that. We want
to show that blockchain games don’t have to suck and that players can
have access to the best possible games yet still play in crypto and get
all the benefits the blockchain and smart contracts bring to the table
such as player protection (no deposit into casino custody), provably
fair gameplay (not only the RNG, but also the entire gameplay in
transparent smart contracts), etc.

Our view on existing blockchain games is that they mostly survive
because they have no blockchain competition. ‘No Natural Predators’, if
you will. If you were to compare them with their online gaming
equivalents, they are unprofessional, low quality game experiences that
offer little if any entertainment value and would not fly if they were
not in crypto. In many cases, they are operated by anonymous owners,
have high gas costs that are uneconomic in the real world, and have
created little or any tech or IP of value, some of them outsourcing
their tech to third party providers so they have little ownership or IP
to their own solutions.

Open Source strategy

We take a commercial and pragmatic view on what and when we should
open source. In the first instance, we have delayed open sourcing
anything we’ve developed for mostly short term commercial reasons. Why
give away the farm when we don’t have to? We’ve built everything
ourselves and invented the tech we needed to accomplish our goal. As we
see it, there’s a few big problems with open sourcing prematurely.

1. Security

As witnessed by the huge number of scams operating in this space,
anytime you have a real money application that’s open sourced – like a
wallet – you give the ability for scammers to fork the code and make it
easy to do lookalike sites that steal peoples’ money or their private
keys. This is the most common form of scam in Ethereum and has been
suffered by the very excellent MyEtherWallet (which we love!) amongst
others. Our FunFair game platform is all about bringing absolute trust
to the online gaming market for the very first time, and it wouldn’t
serve anyone’s interest if we help the scammers get on board early in
our life cycle. This issue of scammers forking code and scamming people
needs to be solved somehow, but in the meantime, whilst we as a
community have no real solution to this issue, we don’t feel it serves
the community or the players, to open source our code at this time. It
helps the scammers much more than it helps the community.

2. Commercially sensitive information

FunFair has created its own tech and IP. We have not been waiting for
anyone else to solve our problems for us. In measurable ways this has
put FunFair ahead of the competition in delivering practical solutions
to online gaming on the blockchain and we feel it is the first
commercially competitive solution that has a good chance at competing
with incumbent (debit/credit card) online gaming markets. Our games
tech is much more FUN (..Fast and Fair) than other blockchain
alternatives in part because we control the quality of the experience
from end to end to ensure we have a platform that delivers the best
possible gaming experience to the player (and suppliers and operators)
in the ecosystem. Why would we serve this up on a silver platter to our
competitors? We would prefer to let them do the work themselves, like
we had to do. We put hard work and inventiveness into this solution. Our
token holders will expect us to deliver a successful business and we
achieve this by commercialising the Tech and Games that we’ve built.

Helping the competition get a huge leg up seems unnecessary, but we
think its likely they will get there in the end. We probably won’t have
our Fate Channel technology all to ourselves forever but we’ve had a
generous head start by inventing it ourselves and we’ll keep evolving
the tech development and intend to continue creating technologically
advanced and practical solutions to deliver gaming to the mass market.
There’s a very good reason the competition has tried to nail us for not
being open source on Reddit and other forums – it’s simply so they can
see how it works for themselves and copy or learn from it, whilst
simultaneously pretending they didn’t need our form of State Channels
anyway. If they want advanced real time gaming, we think they’ll have to
do something similar for themselves and not rely on others to do it for
them.

3. Timing & IP

We do intend eventually – to make large parts of our tech open
source, but the timing of when is the right time to do this is flexible
as the platform isn’t live (to the public) yet. We plan to open source
the parts that we need to, well before the public release, so that we
can do security audits and allow those that want to satisfy themselves
that the games are provably fair to poke them as much as they want (and
we’ll do bug bounties and audits at that point) – But there are also
parts of what we’re creating that we don’t expect to be able to open
source because they contain creative IP like graphics, art, design,
gameplay elements etc. These are the special sauce that make one game
different/better than another in a highly competitive market. Compare
our blackjack to their blackjack. Compare our craps to theirs… or our
roulette.. or our Slots. Our games are highly competitive and we intend
to keep it that way and not give away the special sauce.

4. Third parties

We’re creating a platform for games suppliers and developers to be
able to publish their content for the gaming community, and we don’t
expect they will want to open source their games (apart from the parts
that need to be provably fair).

5. State Channels

Working on our own form of State Channels has given us optimum
solutions for gaming that deliver what we need in terms of performance,
cost and capability which will also scale appropriately to our long term
needs. We called them Fate Channels, because everyone who creates their
own State or Payment channels gets to name their own versions uniquely.
The Lightning Network, Thunder Network, Flare, etc… are all
Bitcoin-related payment channels while in Ethereum we have Raiden,
Plasma etc. They are ALL different yet similar.

What we’ve built isn’t the same as Raiden, far from it. As we
understand it, Raiden is great at sending tokens from place to place in a
network via multiple hops. It’s perfect for something like a real time
token exchange (and RaidEX is coming and we can’t wait for that). But at
this time, Raiden doesn’t support generic state. We need more from our
State Channels than just micro-payments. We don’t need multi hops at
this time but we do need to share random seeds and deliver random
numbers in real time to the games when they need them in a provably fair
way, which is where our Fate Channels name came from. We also need to
have player interactions sent back and forth between the player and
‘house’. And when we move (soon) to fully peer to peer gaming with
untrusted parties, we’ll have carrots and sticks for good and bad
behaviour.

Our solution is optimised for gaming and especially for real money
gaming in real-time. We haven’t seen anything that helps us deliver
this as yet so we had to build it ourselves. The closest generic
solution to what we need is coming, with Plasma, and we’ll be evaluating
it carefully and hope it’ll be helpful to us in the future. But we
think that might be a ways off being able to support our needs, and
meanwhile we’ll keep evolving Fate Channels to continue being an optimum
gaming solution.

Roadmap

As stated in our original White Paper, we’re on a track to deliver
the first release of the FunFair gaming platform, as well as a series of
launch games to seed the market, by year end (2017). In some ways we’re
ahead of schedule, especially on the prototype games development front.

We’ve already started early discussions with both game suppliers and
casino operators and we intend to start signing licenses up around the
time we finish the platform. We don’t want to sign anyone up too far in
advance as the platform is not yet fully featured and we’ve got work we
need to do before it hits that point. Signing up game suppliers or
operators in advance of having a fully working platform would just be a
PR puff piece and quite hollow. We don’t believe we should be doing
that. When we’re ready to sign real licensees up, we’ll be doing it for
commercial reasons, not PR.

Marketing

The FunFair brand is still in its infancy, and although we’re proud
of our unique identity so far, we want to continue to evolve. So we’re
working on something which says more about who we are and stands the
test of time. We’re also building a more effective website which can
speak to the various audiences that need this gaming platform, and which
can also inspire a new wave of FunFairers. We’re close to completing
this part of the puzzle and you’ll see the results very soon.

Exchanges and token liquidity

As most of you know, the FUN token started trading on EtherDelta
literally within seconds of the token being issued, and not much later
was trading on Bittrex. These first two exchanges have served the token
holders’ needs of being able to trade the token. The FUN token is
currently listed on a few exchanges like Bittrex, EtherDelta, ShapeShift and CoinSpot.

According to CoinMarketCap, token liquidity has to date been in the
ballpark of $0.5m – $1m traded each day, sometimes more. This week the
token price has been in the range of $0.025-0.03. We may see liquidity
improve as FUN becomes listed on more exchanges, which is likely to
happen in the very near future. Expect news on additional exchange
listings in the coming days and weeks. Long term we expect to see other
exchanges list the token especially as they overcome their initial
concerns that FunFair is a Casino Operator (it isn’t and will never be!)
and appreciate that FunFair is a pure developer of the technology and
games and is in the licensing business. The company expects to pass all
legal and compliance checks.

We have also tried hard to design the token mechanism to be close to
the textbook definition of an App (utility) token, in that the token is
used to play the games, and that all parts of the ecosystem utilise the
FUN token (players, game suppliers, affiliates, casino operators, random
number generation fees etc). We realise life could’ve been easier if we
had allowed people to play for ETH (cash) and then paid dividends from
the profits to token holders, but our lawyers rightly warned us not to
do this as it would’ve risked us being classed as an unregistered
security (like some of our peers). We designed the token mechanism
carefully with good legal advice to be compliant with where the SEC and
MAS would eventually draw their practical lines in the sand. We hope to
always be the right side of the lines and will take steps to keep it
that way and will evolve the token usage and business model to ensure we
stay legal and compliant at all times.

Phase 2 token sale – ongoing strategic planning

Originally we considered doing a two-phase raise with Phase 1 being a
presale that brought us most of the funds we needed to develop the
technology and games, and Phase 2 bringing us the funding required for a
large marketing budget to be able to build a consumer facing worldwide
brand. Our gaming lawyers have since recommended that we focus on the
development of the platform, tech and protocol, and leave the
consumer-facing marketing to a multitude of casino operators and
affiliates. With this new focus on tech development and less on the
consumer market, we can lower our sights for fundraising and this
changes our strategy entirely for Phase 2, compared to our original
intentions as mentioned in the white paper and other publications.

In the Phase 1 Token Sale, FunFair Pte Ltd initially sold 3.8B
tokens, raising $26m USD. Founders retained an additional 2.2B tokens
(37.5%) on an 18 month lockup that’s released slowly. FunFair also
reserved 11B tokens for the Phase 2 raise which at the token presale
price would have been worth $110m USD. Originally we had intended to
sell most of those 11B tokens to new buyers and then distribute any
unused tokens back to Phase 1 holders, but this no longer makes any
sense and is no longer the plan.

Under the original premise, most of the tokens would be sold and a
small number would be left unused and distributed, but now that we’ve
put to rest thoughts of a massive consumer brand building marketing
spend, we no longer have the requirement for such a large Phase 2 raise.
Also, if we were left with a large number of unused tokens, we would
not be able to distribute them due to legal, tax and market reasons
(which are probably all obvious). Apart from all the other reasons, if a
lot of tokens got distributed, there’d be a mass exodus and a lot of
tokens sold on the markets, crashing the price and we don’t want to do
anything that harms token value. Quite the opposite…

Instead we expect to burn a substantial amount of tokens to reduce
the number of outstanding tokens, and we will sell a much smaller number
in a highly targeted Phase 2 token sale that will be optimised to raise
awareness and open up new markets (in Asia, etc). The rising value of
our existing crypto holdings due to BTC/ETH price increases and the
reduced requirements for funds in Phase 2 have enabled us to find more
efficient ways to deal with the current overhang of tokens and better
protect token value which benefits all holders equally.

We’re working on a final strategy for the Phase 2 token sale right
now with our professional advisers and intend to share details in the
coming weeks. These things take a long time to plan, especially as the
token markets are affected by guidance from regulators and a fluid
situation regarding liquidity and exchanges etc. We currently aim to
announce Phase 2 plans in September and execute the new more modest
Phase 2 token sale most likely in October. We will also be spending time
in Asia this month ahead of the token sale.

That’s all for now, we’ll be back soon with a more detailed technical
update. If you haven’t played any of our games yet, why not?! Head to our Showcase and tell us what you think. If you have any questions or want to stay in touch on a more regular basis, join our Discord or Telegram groups .

Today we launch TESTFUN on the Rinkeby and Kovan Ethereum Test
Networks. This is the closest stage we are yet of showing how FUN will
work once we go live. FunFair’s CTO, Jeremy Longley, will take you
through the steps to play with TESTFUN, and show you how the token moves
through our breakthrough Fate Channel, the first ever live example of
State Channels. Over to you Jeremy:

The latest update to FunFair’s Technology Showcase includes a
significant milestone in the development of our platform – integration
of the FUN token. The token has been designed to be central to the
operation of the platform – players use the token to bet and receive
their winnings, and game providers, operators, affiliates and other
members of the ecosystem are paid in FUN.

As our platform is still in development, the showcase is currently
publicly accessible on the various Ethereum test networks – Rinkeby and
Kovan, and so, to demonstrate the integration, we have created a replica
ERC20 token on these networks, called TESTFUN.

This new integration replaces the previous on-chain part of the
showcase which was designed to demonstrate the speed and gas-efficiency
of the Fate Channels technology – which continues to be central to our
proposition.

In order to try out the new system, you’ll still need an
Ethereum-enabled browser or browser plug-in (such as Mist, Parity or
Metamask), and to be connected to Rinkeby or Kovan. But you’ll also need
some TESTFUN tokens – so we’ve created a Faucet (which seems to be the
accepted term) to give you some to play with; this is integrated
directly into the showcase application. It will also dish out a fairly
limited amount of Rinkeby/Kovan test ETH if you have none.

Once you have some TESTFUN it’s business as usual – you can start a
game session by committing an amount of tokens to the session, play, and
then cash out your winnings if you’re lucky enough!

Most of the technical stuff happens under the hood – but we’ve set it
up so you can use tools like https://etherscan.io/ to see the
transactions and the tokens moving around, as we’ve continued to adopt
the ERC20 standard for our token.

Once you’ve opened a game session (which you, as the player, do by
making a transaction on the Ethereum network) you can see the tokens
move in the transaction log – an example here:

Image 1. Opening of a Fate Channel

You’ll see your tokens being moved into the control of the Fate
Channel contract. You’ll also notice other tokens being moved in. These
belong to the House – the other side of the Fate Channel – and this
guarantees that the tokens are locked and so available if you win them!

Then the gameplay happens – following the slightly complex
reverse-hash-chain RNG system and state update signing processes as
detailed in the white paper – until you decide to cash out.

At this point you’ll see another transaction on the blockchain:

Image 2. Closing of a Fate Channel

This shows the closing of a Fate Channel session. Once all the data
has been verified in the Fate Channel contract, which had temporary
control of the tokens, it releases them back to the relevant owners –
the player and the house.

You’ll also notice a third token
transfer – this is our burn mechanism kicking in – where tokens are
destroyed as part of their use in order to decrease the overall supply
of tokens. As Jez San has regularly said on our community channels, we
are still evaluating the economic and legal implications of this
approach, but we’ve built it in anyway so that it’s ready. Vitalik
Buterin recently posted positively about this approach (http://vitalik.ca/general/2017/10/17/moe.html)
which he calls a Sink. At the moment the amount of tokens burned is
based on the player’s stake. This is extremely unlikely to be the final
approach, but we wanted to demonstrate the concept at this point. This
will also be the point where other fees for operators/game developers
etc are paid.

To try out TESTFUN, please visit our showcase here.

We’re always keen to hear what you think, please do connect with us on DiscordTelegram.

FunFair is pleased to be a Global Sponsor of Devcon3 (Ethereum
Foundation’s annual developers conference), which starts on November 1.
Hope to see you there!

FunFair (FUN) - Awards and latest Product update

We are very excited to announce that we have won ICO of the year at the Malta iGaming Awards.

This is a well-respected Gambling ceremony which saw us line up next
to DAO.Casino and Edgeless. For the team this is a superb achievement
and recognises their hard earned effort since our June ICO.

For the Technology team this is an even sweeter result as they have
today updated our Showcase with the latest changes, which include:

A new lobby featuring improved navigation and visuals

Three card poker (local play)

Video Poker is now playable on our Fate Channels

All existing on-chain games are now running on the new V3 fate channels

New music, SFX, and brand new graphics FX

UI and layout improvements have also been released, with plenty of misc improvements and bug fixes

Busy team!

Jeremy Longley – our CTO – adds:

“We’re delighted to finally be able to showcase the latest upgrade to
our Fate Channels system. Although there’s perhaps not much to see on
the surface, we decided not to just hack in a multi-state game for the
sake of it, but to fully upgrade the protocol and refactor the code to
match; consequently we’ve now ended up with a really versatile solution –
and the team and I are really happy about that!

I’m planning a much more detailed blog post probably called something
like ‘Bringing Turing Completeness to State Channels’ which will
explain how we’ve moved our ideas forward over the last six months – and
hopefully won’t be too intractable a read!”

We are also working hard at our plans for 2018 and will be providing a wider, more comprehensive company update on the 20###sup/sup### December.

FunFair (FUN) - An Approach for Turing-Complete State Channels – Part 1

State Channels have been intriguing the crypto-community since their
initial conception, and have been an active topic of discussion for many
years.

The process of two or more parties committing an initial state
on-chain, transacting off-chain using a sequence of signed messages, and
committing the final result back to the chain using a second on-chain
transaction sounds like a great solution to the inherent scaling issues
of today’s blockchain implementations.

Much of the discussion so far, though, has been around the simple
process of transferring tokens between parties, but this concept can do
so much more, and so let’s explore an approach to the implementation of
Turing-powerful logic in a State Channel.

For the purposes of this note, I’ve narrowed the scope to a 1-to-1
channel in which each party takes turns to act, but the concepts can be
extended to a broader range of use cases.

First up, let’s recap on what a State Machine is. A State Machine is
a very simple concept that underpins a vast amount of the world’s
software in its various forms, and can be summarised thus:

f(state, action) => state’

ie it is a function that takes an existing state and an action (a way
it should be modified), then applies the action to the state and
returns a new state. This is one of the core concepts that underpins
most traditional video games (my personal background prior to crypto) –
and the action can be anything from the user pressing a button, a
network packet arriving, or (most commonly in games) time passing
(hopefully at a smooth 60 frames per second!).

For the rest of this note I’m going to use a worked example: Chess.
Chess is a 1-1 game, players take turns, and the rules are clearly
defined so it’s a natural fit. A State Machine that implemented chess
would look like this:

The State: The current positions of the pieces on the board, whose
turn it is, and whether the board is in check or checkmate (I’m going to
ignore Resignation and Stalemate for this note for simplicity).

Actions: A move that specifies a piece and a target square to move it to.

The State Machine needs to do two things when it’s called:

Validate that the action is valid:

Is it the turn of the player who’s posted the action?

Is the piece the player is trying to move legally allowed to move to
the target square (including the restrictions of being in Check etc)

Is the game not yet finished by a prior Checkmate

Update the state

Move the piece to the new square

Remove any taken pieces from the board

Check for Check and Checkmate

Update whose turn it is

And with that you have the ability to play chess, by calling the
function repeatedly by alternating players and passing in the previous
state each time.

Can we write this function in (say) Solidity? Certainly we can, but
keeping the state on the chain and calling the contract code directly to
update the state for each turn will result in a slow and expensive user
experience, and this is where State Channels can help!

Let’s look at a first-pass attempt at implementing this in real world
– and let’s give it a reason for existing on the chain in the first
place – competition between two players for something of value. We can
open a channel simply enough by writing a contract that takes funds from
both players and locks them until the channel is closed. But what else
do we need to do?

First, we need to create an application for each player to use.
Let’s assume that it’s web-based, uses web3 to interact with the chain,
uses some unspecified point-to-point mechanism to communicate directly
between the two player applications, and has some nice UI for the
players to interact with it.

At this point, if we implement the State Machine function within the
browser app, then two players could play a game of chess by each player
in turn choosing a move, updating the state using the State Machine, and
passing the state over to the other player. Without any checking,
though, each player could trivially cheat. So, progressively, here’s
what is added to make the game fair:

Instead of passing the new state, the acting player passes both the
action and the new state. The passive player also runs the State
Machine against their local copy of the previous state, and sees if the
result is the same as the new state. If not, the player has tried to
cheat

The active player signs the message containing their action and the
new state with their private key. Now if the second player detects that
the state transition is invalid, they can prove that the active player
was trying to cheat

The active player co-signs the previous message from the
second player (which they’ve signed in step 2 above) and sends it along
with the new move state. This is really important, as it sets a
base-line for where both players agree.

Each time a signed message is sent, the signatures are checked by
the other party. An invalid signature is rejected as an ill-formed
message rather than an attempt to cheat (as we need a valid signature to
prove this)

At the point at which the game is over the final state is signed by
both parties, and we have a game of chess where every move has been
validated and agreed by both players.

So – how do we put this on-chain in a State Channel? From an
engineering point-of-view it’s relatively simple – we create an on-chain
CloseChannel() function in the State Channel contract which takes a
signed state from both players, verifies that the signatures are valid,
verifies that the signed state of the game is in Checkmate, and
transfers the locked assets to the winner. Great!

But… have we created a provably-fair, distributed, autonomous game at this point? No! For two reasons:

We haven’t worked out what to do when one player tries to cheat, and

The actual rules of the game are embedded in the client application,
which, depending on how it’s hosted, could be changed/rigged
maliciously.

Additionally – how can we guarantee that both players are actually using the same State Machine?

And so we finally get to the point of the note, and the solution it describes!

As discussed above, we can encode the rules of Chess on the
blockchain, but we don’t really want to play a game using on-chain
transactions for each move. However, there’s no reason that the chain
itself can’t be an authority on the rules of the game – and, much more
importantly, an authority on the code that implements the rules of the
game. If we create the State Machine function in Solidity and publish
it on-chain, it can be independently verified as being correct in
advance, and referenced by anyone.

More importantly, though, it can be executed off-chain, which is
orders of magnitude faster and cheaper than doing it on chain. (A note:
the State Machine function itself in this form has no side effects, so
it is a constant function in effect)

So – if, in our worked example above, we replace the local,
client-side State Machine implementation with an off-chain execution of
the on-chain code, both parties can feel a lot more confident about the
code that’s being run, and that what they’re signing is correct.

But the best bit is that we now have a solution for a player who
tries to cheat. If they send a signed message that includes a state
transition which is invalid – as in it doesn’t follow the rules of the
on-chain code – we can do something about it! The receiving player can
call an on-chain dispute resolution function, passing in the signed but
invalid state transition, this function can call the *same* State
Machine code on-chain and demonstrate that it’s invalid, and the
cheating player can be penalised.

So – by this approach, we can construct a wide variety of
state-machines for all sorts of purposes, which can be advanced
off-chain in a provably verifiable way using committed on-chain logic,
and is simply verifiable on-chain in the case of dispute.

This methodology imposes no restriction on the complexity of the
State Machine, the state or the actions which transition it, other than
what is capable of being executed on the chain – so it is as
Turing-Complete as the chain on which it is implemented.

In Part two, I plan to discuss:

How, at FunFair, we’ve actually implemented a real-world solution based on this concept, and some of the challenges we’ve faced

How we’ve injected randomness into the process

How to deal with some more malicious cases of attempting to cheat (a
trivial example in the Chess example is a player who realises he’s
about to lose simply doing nothing)

A discussion on fixed-odds gambling games, where the rules are
different for each participant and the differences between inter- and
intra- round state for a sequence of games being played in the same
State Channel

How to scale this approach for hundreds of different games with different rules

FunFair (FUN) - Company Update December 2017

1. Introduction

2. An exciting 2018

3. FunFair as a Business

4. Three Pillars of Success

5. Summary & Conclusion

1. Introduction

What a phenomenal 6 months it has been for FunFair!

Since June we have grown the team by over 500%, released over 5
product updates, won the Malta iGaming ICO of the year award,
participated as the Global Sponsor of Devcon3, where we received huge
accolades for our ground-breaking Fate channels, all of which whilst
delivering against our ICO roadmap set out in June.

Moreover, we have made significant progress on our 2018 vision as
well as the building blocks required to help us achieve our objective of
delivering blockchain technology to the $60bn gambling industry.

We have ambitious plans and we continue to invest accordingly. This
week alone we have secured four more hires in our technology, game
design and administration teams. Combined with current vacancies, of
which there are an additional 20 positions, our headcount is set to rise
to approximately 50 team members by the end of Q1, 2018.

We are also fortunate to have Stefan Kovach join us, in a consultancy
capacity, to help with the development of our business strategy, plus
brand and marketing activities. Stef is an industry executive with a
wealth of experience, having headed up the marketing functions of both
PokerStars and bwin.party – two of the biggest brands in online
gambling.

Talent acquisition and retention is key to our success and we will
continue to focus on creating a friendly and creative working
environment that facilitates innovation.

2. An exciting 2018

We have ambitious plans and we believe that we are in a unique
position to deliver disruptive technology to the Gambling industry. To
do this we need to scale our team, whilst keeping our end-users’ needs
at the forefront of product development.

We are making good progress with this and look forward to sharing
with you how we intend to structure and run the product teams in the new
year.

Our primary goal for the start of 2018 is the public release of the
first FunFair blockchain casino. This will entail a new lobby, updates
to our proprietary Fate Channels, new gaming content and a brand new
design interface. We are already engaging with operators and affiliates,
who have demonstrated significant interest in our technology, and will
be working towards on-boarding a partner for a Q2 release. Our ideal
partner will work alongside our teams to iterate and enhance the
technology, in order to allow us to establish a rollout plan for H2. In
return, we will offer access to innovative blockchain technology and a
growing cryptocurrency community.

High level 2018 Outlook:

Q1:

In January we will be submitting to the UK Gambling Commission our application for a Remote Gambling Software License.

In February we will be attending ICE Gaming, an international B2B
conferencing event, where we will be introducing the FunFair brand to
the gaming industry.

By the end of March V1 of the FunFair blockchain casino nears
completion. This release will allow for real FUN to be used on the Main
Ethereum Network for the first time.

Q2:

Operator On-Boarding: Deploying the FunFair casino in partnership
with a friendly operator; objective: learn, adapt & iterate the
technology as part of a soft launch.

Further product enhancements and features will continue to be worked
on and, as we scale, we expect to introduce more regular product
releases.

Engaging with 3rd party game developers, publishing API documentation and sample games and contracts.

Q3-4:

Product feature enhancements and further operator on-boarding.

Comprehensive operator reporting and administration tools.

3. FunFair as a Business

From a pure business perspective, we are stronger than ever, having
spent the past two months establishing the core of the operation. This
effort included a review of the corporate structure for the operating
entity and identification of the markets where we intend to apply for
gambling licences.

We have therefore instructed lawyers and are, in some cases, liaising
directly with the gambling commissions in the United Kingdom, Malta and
Gibraltar with a view to achieving licensure at some point during the
first part of 2018.

Unlike many of the other blockchain projects in the space we see the
complexity of the fractured legislative landscape as an opportunity to
help educate regulators, particularly in the more reputable
jurisdictions, about the benefits of the technology from a regulatory
oversight point of view.

It goes without saying that establishing the legal basis for offering
our services is particularly important, as we begin to engage with
operators for launching our products in the new year.

I am also pleased to let you know that, we have formalised our
finance and accounting procedures. This is an area many start-ups tend
to neglect and, by ensuring that the correct controls are established at
the very beginning, the business has the required foundation to support
future successes.

Furthermore, our treasury is in very good health and over the past
month we have streamlined our holdings. We converted our remaining
Bitcoin holdings into a rising market and currently hold 85,000 ETH and
4.45BN FUN, with a year’s worth of fiat currency to cover our operating
expense.

Recently we sold some FUN tokens to an institutional investor
utilising 250M of the annual 1BN allotment. This was an exception, as we
do not intend to reduce our FUN holdings for the foreseeable future,
unless a strategic target suddenly presents itself.

In summary we have a very strong financial basis to help us
accomplish our mission, whilst also allowing us the ability to respond
to investment opportunities as the technology landscape rapidly evolves.

4. Three Pillars of Success

When I joined the FunFair team I committed to establishing a
foundation for success; one that attracts the best talent, focuses on
the customer and creates an environment which underpins our hunger as a
start-up.

We operate in a competitive landscape and it is our ambition and
drive as a team, which sits at the core of our ability to deliver on our
promises.

It is the combination of these factors that will allow us to deliver
our product roadmap and the services that we want our customers to
enjoy.

A strategy that can be summarised as the FunFair Pillars of Success:

Operational excellence

How we operate as a team; focusing on product quality and delivery capability

How we treat our Token holders and our Business partners; transparency in everything we do

Product Capability

Be the best; in driving product innovation & value, not for the
sake of technology, but with the goal of delivering engaging customer
experience

People & Culture

Attract the best talent, retain the best talent

Be friendly, have fun, and enable a creative environment that naturally drives innovation

5. Summary & Conclusion

We have enjoyed a very successful start to our new business, and we
remain hungry and excited about bringing our product to the wider market
in 2018. We are full of ideas and passion to deliver ground breaking
blockchain technology which can add real value to gambling consumers
globally. We now have a business structure in place that will enable us
to succeed in the delivery of that vision.

On behalf of the entire FunFair team I’d like to thank all our
supporters and advisors for their continued support and trust throughout
the year.